There are a variety of benefits contracts available on the market and these benefits contracts are typically purchased to provide some level of security against one or more potential risks. A benefits contract may also have an investment function, such as, for example, in the case of an annuity. For example, life insurance contracts typically provide financial security for family members in the event of a person's death. Similarly, health insurance typically provides security against the potentially high costs of an illness or injury. Long-term care benefits typically provide security against the potentially high cost of such care. These and other benefits contracts serve to pass the risk of an unknown event from one party to another, typically in exchange for a fee.
Although there are many different types of benefits contracts available, customers must select the appropriate contract or combination of contracts to provide the most utility with limited resources. Often, it may not be possible to purchase all of the benefits contracts that a consumer may desire, due to limited financial resources. In addition, some consumers are reluctant to purchase certain types of benefits contracts out of fear that they will make payments for a contract for which they will never receive any return. For example, a consumer may purchase a long-term care benefit for a considerable amount of money and die without ever having a need for long-term care.